REAL Wealth Management 2021 – Wrap-Up

Over the past few days, I have written posts to discuss what I perceive to be the three true areas of comprehensive wealth management – accumulation, preservation/protection and distribution/transfer. While many financial professionals may claim to be wealth managers, a study by CEG Worldwide concluded that only 6 percent of those who claimed to be wealth managers actually qualified as true wealth managers, with the remaining 94 percent simply being product salesmen.  CEG’s primary criteria focused on “wealth managers” who addressed all aspects of wealth management and those who employed a  “process” approach to wealth management rather than a “product” approach.

Although I have discussed wealth management in terms of three areas, hopefully the posts have shown that there is actually a lot of overlap between the three areas, showing that proper wealth management is an extremely integrated process.  Wealth management is also an ongoing process, as laws and regulations involving wealth management are subject to change.

The key to effective accumulation is to protect against unnecessary and significant losses, in other words risk management. Losses can come from various areas, including changes in the stock market, taxes, liability issues and effective wealth distribution planning.  Each of these areas should be addressed through strategies such as constructing and maintaining an effectively diversified investment portfolio, proper tax planning, insurance, and regular review of one’s estate planning documents and retirement plan beneficiary forms.

The key to effective wealth preservation and protection is to be proactive.  As I mentioned in my earlier post, many of the wealth preservation/protection techniques often used are basically ineffective once the threatening event has occurred. The other factor often overlooked by those expressing an interest in wealth preservation/protection is that the level of protection provided by wealth preservation/protection strategies is directly related to the amount of control given up by the party seek the preservation/protection. In other words, generally speaking, you can’t have your cake, i.e., complete control over your assets, and eat it too, i.e., be able to protect those assets from everyone.

Many people incorrectly think they cannot afford wealth management. Fortunately, some of the most effective wealth management techniques are inexpensive, such as annual gifting and proper completion of retirement plan beneficiary forms.  While there are those who might like to brag about having an off-shore trust in the Cook Islands or the Isle of Man, very few people need that level of wealth preservation and protection.

Again, in most cases the key to effective wealth management is to be proactive and consult with professionals  who are both knowledgeable and experienced in such matters.  Note I said professionals, not professional.  In wealth management, there is truly strength in numbers.  Given the areas that are involved in true wealth management, a good wealth management team will usually include, at a minimum, an estate planning expert, a tax expert, an investment adviser, and a wealth preservation/protection attorney.

Hopefully this series has been of some benefit to readers. I have received a number of complimentary e-mails, which I truly appreciate.

Take care.

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